Credit card issuer Discover is officially in the mortgage business, months after initial speculation surfaced.
The company will acquire the mortgage loan origination business from Tree.com (LendingTree) for $55.9 million, per a company release.
More specifically, Discover is buying all the operating and related assets of Home Loan Center, the mortgage lending subsidiary of Tree.com, which offers both purchase money mortgages and refinance loans.
Doing so will allow the company to add a residential mortgage arm to Discover’s direct-to-consumer banking business, which will probably allow for some serious cross-selling.
Discover plans to originate residential mortgages nationwide to sell on the secondary market on a servicing-released basis.
It’s unclear what the loan program offerings will be, but I reckon they’ll offer the basics, such as fixed mortgages, adjustable-rate mortgages, FHA loans, and home equity lines of credit to people with good credit.
Home Loan Center was originally a correspondent lender formed back in July 2002, and was later sold to LendingTree in December 2004 before the boom went bust.
The company has offices in Irvine, California and Charlotte, North Carolina.
Back in 2009, Discover also became a bank holding company to participate in TARP – they offer savings accounts, money markets, CDs, and IRAs.
Should be interesting to see how it pans out for Discover.